ML Covered - April 2026

We are pleased to share our latest instalment of ML Covered, our monthly round-up of key events relevant to those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.

Fiduciary agent forced to pay compensation after dishonestly asset-stripping company

In Hawkes v Cook [2026] EWHC 506 (Comm) it was ruled that an independent consultant was a fiduciary agent and trustee of company property and had to pay equitable compensation for diverting the proceeds of the sale of the property.

Background

Mark Glenn Hawkes (the Claimant) was the sole director and shareholder of Michael Green Plant Ltd (the Company), a company that specialised in demolition and clearance, and owned plant and land in order to perform this activity. By 2004, the Company was in serious financial difficulty and subject to a HMRC winding‑up petition for c.£311,000.

Through a director of County Leasing Ltd (CLL), the Claimant was introduced to Gordon Cook (the Defendant), who traded as “Chard Wallis”, and was described as an independent consultant experienced in insolvency and with offices in multiple countries.

On 16 November 2004, the Defendant sent an engagement letter recording that the Claimant had instructed him “to arrange the liquidation of the company and the ‘buy back’ of all of the company’s assets including plant and equipment, land and book debts”. This was to be done via financing from CLL, with the Defendant's fees to be paid from asset realisations.

Company minutes drafted by the Defendant and signed by the Claimant, in his capacity as director of the Company, empowered Chard Wallis to realise the Company’s assets, collect monies due and “hold monies on trust for the company” and to make payments out of Company funds pending liquidation.

The Defendant implemented a pre‑pack style sale‑and‑leaseback, with CLL buying additional items, the plant and the land for a total of about £222,700 and leased them to the Claimant's new companies. On 28 January 2005, an administration order was made, and an administrator (later to become liquidator) was appointed for the Company. Despite realisations of c. £222,700, only about £11,223 was ultimately available to HMRC as preferential creditor. The liquidator assigned the Company’s claims against the Defendant to the Claimant.

Decision

The court held that the Defendant had been engaged on behalf of the Company, not merely by the Claimant personally. That appointment made him a fiduciary agent and trustee of Company property. The court found the Defendant had deliberately misrepresented his status and position, as he was an undischarged bankrupt and disqualified director, operating as a sole trader from home and these misrepresentations had induced his appointment.

The court found that the Defendant had dishonestly diverted company monies far beyond the agreed £15,000 fee. The judge also found the Defendant to have committed a fraudulent breach of trust and deceit, and awarded equitable compensation of £123,250.

Key Takeaways

With the number of companies becoming insolvent remaining high, directors and officers should be mindful when appointing third parties to assist with the sale of company assets, and whether such an arrangement makes the third party a fiduciary agent and de facto trustee of the company and its property, and what remedies are available to them should the third parties commit any wrongdoing.

To read the case in full, please click here.

Company held to be beneficial owners of properties funded by breach of fiduciary duty

In L&S Accounting Firm Umbrella Ltd v Shiloh Holdings Ltd [2026] EWHC 618 (Ch), a company was found to hold three properties on constructive trust, after the funds to pay for them had originated from a prior breach of fiduciary duty by the directors.

Background

L&S Accounting Firm Umbrella Ltd (the Company) operated a payroll service and supplied labour to healthcare staffing agencies. The Company invoiced agencies for workers’ gross pay plus VAT, and, as their employer, was responsible for PAYE and NICs. In October 2022, HMRC investigated the Company and obtained a freezing injunction. In 2024, a court gave summary judgment against the Company's two former directors (the Directors), and their associated companies, finding a large‑scale “labour supply fraud” against HMRC involving both VAT and PAYE/NICs. The Directors had diverted the Company's funds from the Company bank account into personal and linked accounts, in breach of fiduciary duty, and used false accounts and returns to conceal the fraud.

The present claim involved three properties in Bedford acquired between August 2022 and February 2023. The properties were acquired in the name of Shiloh Holdings Ltd (Shiloh), with the Directors also acting as the directors of Shiloh, or de facto controllers, with their minor children as shareholders.

The liquidators of the Company contended that the purchase monies for the properties were traceable to the Company's funds paid away in breach of duty through various accounts controlled by the Directors, and that Shiloh received those funds with the requisite knowledge, giving rise to a knowing receipt/constructive trust claim.

Decision

The judge granted summary judgment for the Company, holding that Shiloh held the three properties on constructive trust for the Company. The judge ruled that the 2024 judgment against the directors and their associated companies bound Shiloh, and it would have been an abuse of process to relitigate those issues. The Company's money had been traced to the monies used to purchase the properties, and Shiloh was liable in knowing receipt because of the Directors' knowledge of their breaches of fiduciary duty.

Key takeaways

The judgment highlights the willingness of courts, in circumstances where directors have profited by breaching their fiduciary duty to a company, to recover misappropriated funds by way of a constructive trust.

To read the case in full, please click here.

Court of Appeal revisits the ‘reason why’ test in social media religious belief case

The Court of Appeal has refused to reopen its decision to refuse permission to appeal in a case concerning an actor whose contracts were terminated following controversy over her social media posts expressing religious beliefs about homosexuality.

The judgment provides an important clarification of the “reason why” test in discrimination cases and clarifies the boundary between protected beliefs, their manifestation and an employer’s response to reputational risk.

Background

The case arose from the dismissal of actor Seyi Omooba, who had been cast in a stage production of The Colour Purple, in the role of Celie, a lesbian character. Shortly after casting was announced, an old social media post resurfaced in which she expressed her belief that homosexual conduct was a sin.

The post triggered significant backlash directed at both the production and her talent agency. In response both the theatre producer and her agency terminated their contractual relationships with her, citing reputational and commercial concerns rather than disagreement with her beliefs themselves.

Tribunal and Employment Appeal Tribunal decisions

At first instance, the Employment Tribunal (the Tribunal) held that:

• Ms Omooba's belief qualified as a protected belief under the Equality Act 2010; but
• The reason for termination was not the belief itself, but the commercial impact of the social media backlash.

On that basis the Tribunal found that there was no direct religion or belief discrimination on the part of either the theatre or her agent. Her claims for harassment and breach of contract claim also failed.

The Employment Appeal Tribunal (EAT) dismissed her appeal. It held that the tribunal had been entitled to conclude that, while Ms Omooba’s belief formed part of the factual background, it was not the “reason why” she had been dismissed. The operative reason was the employer's response to the reputational fallout.

The Court of Appeal

Ms Omooba then appealed to the Court of Appeal, but permission to do so was refused on the grounds that the 'reason why' test was a question of fact and that both the EAT and Tribunal had reached fair conclusions on that reason. Ms Omooba then applied to reopen the refusal of permission to appeal, alleging that the Court of Appeal had been inconsistent with a decision in Higgs v Farmor's School [2025] EWCA Civ 109. In this case, the Court of Appeal's dismissal of an employee because of posts on social media, could have led people to believe she was homophobic, which was in of itself an act of discrimination.

In doing so, the Court of Appeal has fully reviewed the 'reason why' test and put together the below principles:

• When determining whether someone has been treated less favourably because of a protected characteristic, the Tribunal must identify the “reason why” the treatment occurred.
• The test is primarily subjective (save for criterion-based cases): what, in fact, motivated the decision-maker?
• A distinction must be drawn between the reason why someone was treated less favourably and the motives.
• If a protected characteristic had a significant influence on the 'reason why', then this is sufficient to establish discrimination.
• A desire to avoid accusations of discrimination against others will not, by itself, prevent a finding of discrimination.
• It is not enough that the protected characteristic is part of the sequence of events.
• The 'separability approach' is useful to determine the 'reason why' – for example the manner of the expression of a protected belief.
• The 'reason why' is a question of fact, appeals can only be allowed on errors of law.

Applying these principles, the Court of Appeal held that there was no inconsistency with Higgs and that the lower tribunals’ reasoning in Ms Omooba’s case disclosed no arguable error of law.

Why this case matters

This decision is now a significant authority on the boundary between:

• protected religious or philosophical beliefs;
• the manifestation of those beliefs, particularly on social media; and
• the extent to which employers can legitimately respond to reputational and commercial risk.

It sits alongside Higgs as part of a growing body of case law on belief-related social media expression. While Higgs is likely to be more relevant to the proportionality of a dismissal where the underlying reason is “uncontroversial”, this decision provides valuable clarity on how tribunals should approach the core “reason why” question in discrimination claims.

For employers, especially those in high-profile or reputation-sensitive sectors, the case underlines the importance of:

• carefully documenting the true reasons for disciplinary or contractual decisions;
• distinguishing between objection to the content of a protected belief and concerns about the manner or context in which it is expressed; and
• recognising that reputational concerns will not automatically insulate a decision from discrimination scrutiny.

Revised compensation rates for injury to feelings

In the Employment Tribunal, 'Vento' bands are used to value compensation for injury to feelings in discrimination and whistleblowing detriment claims. Presidential Guidance ordinarily updates the numerical values of each band, every year, to account for inflation.

This year is no exception, as on 25 March 2026, the ninth addendum was published which has marginally increased the value of each Vento band in accordance with the Retail Price Index as of March 2026. The bands are split into three main brackets based on severity; they are outlined below, alongside the new rates which are to apply:

• Lower band for less serious cases. For example, a one‑off incident with limited lasting impact (£1,300 – £12,600; previously £1,200 – £12,100).
• Middle band for more serious or repeated conduct causing greater distress (£12,600 – £37,700; previously £12,100 – £36,400).
• Upper band for the most serious cases, such as a sustained campaign of discrimination with long‑term consequences for the claimant (£37,700 – £62,900; previously £36,400 – £60,700).

The amended rates will be applicable for all claims made on or after 6 April 2026 and will not be retrospectively applicable to claims made prior to this date.

Click here to view the Ninth Addendum which updates the applicable compensation bands. 

TPR sets out projections for next ten years of DB schemes

The Pensions Regulator (TPR) has published a report setting out its projections for the next decade of defined benefit (DB) schemes. TPR projects that over 75% of schemes could be in a position to buy-out by 2035, with more than half expected to do so. It estimates that around 2,400 – 2,600 schemes, holding in excess of £200 billion of assets, may ultimately transfer to the insurance market. At the same time, the sector has moved from widespread deficits to material surpluses on both low dependency and buy-out bases.

TPR anticipates an aggregate buy-out surplus of around £120 billion (in real terms). For open schemes, a further £30 billion of surplus could be used to fund future accrual. The forthcoming Pensions Schemes Bill is expected to expand the menu of options, particularly around accessing surplus that would previously have been ‘trapped’ while facilitating alternative consolidation vehicles, including superfunds. Against this backdrop, TPR highlight a number of strategic choices that trustees and sponsors now face:

• when and whether to exit the DB sphere via a traditional insurance buy-out.
• whether to run on and deploy surplus to support ongoing benefit accrual or wider scheme objectives.
• whether to consolidate under the new superfund regime, taking advantage of additional capacity alongside insurers.

TPR’s analysis suggests sufficient market capacity for all schemes that wish to buy-out over the next decade, albeit with potential short-term pressures. The key challenge is no longer simply achieving full funding but deciding how and when to access, and allocate, surplus between savers and employers and ensuring scheme rules do not create unintended trapped value. These issues are new ones for trustees in many cases and with that bring different risks such as challenges to the use of surplus and whether to 'run on' or buy-out.

To read TPR's report, click here.

Master trusts dominate as smaller schemes continue to exit the DC market, new TPR data reveals

TPR's report (above) also highlights the continued shift in the defined contribution (DC) market towards fewer, larger schemes, dominated by master trusts. The number of DC schemes fell by 15% to 790 in 2025, driven largely by the exit of schemes with fewer than 5,000 members. In contrast, total DC assets rose by 22% from £205 billion to £249 billion, with memberships increasing by 7%. Master trusts now hold 92% of DC memberships (30.1 million) and 83% of assets (£208 billion), underlining their market dominance.

TPR is clear that schemes which cannot demonstrate value for savers should consider consolidating, stressing that larger schemes are typically better positioned to deliver value-for-money (VfM) through stronger investment propositions and better governance and service. Trustees of smaller schemes are urged to review their arrangements now and, where they cannot match leading performers, to transfer members to better value solutions.

The Pension Schemes Bill proposes new powers to force the transfer of member benefits out of DC schemes and to different schemes if the ceding scheme is failing to provide VfM – schemes are seemingly reviewing their position ahead of the introduction of this new power.

TPR publishes updated capital reserve guidance for DC master trusts

TPR has updated its capital reserve guidance for DC master trusts to balance member protection with a reduced regulatory burden and support for innovation. As the market matures and schemes consolidate, TPR’s revised approach allows a more scheme-specific mix of assets to meet reserving requirements, potentially freeing capital previously held as cash. Updated expectations reflect stronger governance, improved risk management and TPR’s experience of supervising schemes and exits. TPR plans to enhance data collection from 2026 and publish annual reserving data from 2027, supporting greater transparency as the market evolves towards larger 'megafund' master trusts.

To consider the updated guidance, click here.

TPR urges innovation in 'new pensions era'

Speaking at the JP Morgan Pensions and Savings Symposium, TPR Chief Executive, Nausicaa Delfas, has called on the pensions industry to embrace innovation to deliver sustainable retirement incomes in a “new pensions era”. Delfas highlighted that automatic enrolment has brought over 22 million people into workplace pensions, but 14.6 million are still under-saving.

Delfas signalled a shift towards fewer, larger, well-run schemes that can provide better value and clearer retirement choices. Key areas for innovation include:

• Endgame options for well-funded and underfunded DB schemes, including buy-out, run-on to generate surplus, and superfund transfers.
• Investment strategies for DC schemes, supported by the forthcoming VfM framework to move thinking beyond cost alone.
• Default guided retirement pathways that reflect the reality that only one in five savers currently has a decumulation plan.

She also pointed to the critical role of strong governance, efficient administration, quality data and responsible use of AI, with an AI action plan expected in May. TPR will continue to move towards more outcome-focused regulation and reduce unnecessary burdens, illustrated by updated DC master trust reserving guidance published alongside the speech.

DWP guidance for DC schemes to meet £25bn scale measures

The Department for Work and Pensions (DWP) has outlined how DC master trusts will be expected to meet a proposed £25bn scale requirement under the Pension Schemes Bill.

Existing master trusts that have not yet reached £25bn, and are unlikely to do so by 2030, may be able to join a “transition pathway” if they can credibly project that they will reach £25bn by 2035. New entrants will face a separate pathway and will need to offer something materially different from existing providers, alongside demonstrating strong potential growth.

The requirement will apply to a scheme’s “main scale default arrangement”. In some cases, a combination of a master trust and a group personal pension (GPP) using the same core investment strategy may be treated as a single default for the purposes of the scale test. The DWP’s proposals also include standards on governance and investment expertise, not just size.

The Pension Schemes Bill is still being debated in the House of Lords, where peers have tabled amendments seeking exemptions from the £25bn threshold. These include carve-outs for schemes with consistently high VfM ratings, those where consolidation would not clearly improve member outcomes, and those with above-average investment performance or qualifying innovative default strategies. Other amendments seek flexibility for providers with multiple default funds.

In practice, many DC providers are expected to consider consolidation, as organic growth alone may not be sufficient. Employers and trustees should begin reviewing their long-term DC strategy, assessing whether their chosen arrangement can realistically achieve scale or whether moving to a larger provider may better support member outcomes.

Pension Schemes Bill 2025: proposed amendment to impact investment decisions

The government has tabled an amendment to the Pension Schemes Bill 2025 introducing a new power for the Secretary of State that could materially affect how trustees approach investment decisions.

The proposed new section 36ZA of the Pensions Act 1995 will require the Secretary of State to issue, publish and periodically update guidance explaining the law in regulations made under section 35(4) (statement of investment principles) and section 36(1) (choosing investments). The first iteration of this guidance must be produced within 12 months of the provision coming into force. The government has confirmed that the guidance may define key concepts such as 'financially material considerations' (e.g. environmental, social and governance factors) and the 'best interests of members'. Crucially, trustees will be required to 'have regard to' the guidance, effectively shifting interpretative authority from the courts and the Regulator towards government.

If enacted as drafted, trustees and advisers will need robust processes to track, document and justify how they comply with each iteration of the guidance. The Bill is scheduled to proceed to the House of Lords report stage on 16 March 2026.  The changes may increase risk for trustees around investment decisions.

TPO holds trustee liable for deferred scheme benefits as no valid transfer-out was evidenced

A recent determination by the Pensions Ombudsman (TPO) highlights the high evidential bar trustees must clear to demonstrate that a historic transfer-out has validly taken place.

The Background

The Complainant worked for Midland Bank (later HSBC) from 1972 to 1990 and was a member of their Pension Scheme. Under Schedule 1A to the Social Security and Pensions Act 1975, transfers had to be applied for within six months of leaving service and completed within 12 months of that application, with trustees only discharged once a transfer was properly completed.

The Complainant left employment and became a deferred member in March 1990. In January 1991, she received a cash equivalent transfer value (CETV) quotation of £5,287, guaranteed for three months. The Scheme ledger later recorded that her benefits were transferred to a Liberty Life personal pension on 2 September 1992 for £6,181.11.

When the Complainant reached normal retirement age in 2016, the Scheme’s administrator told her that her pension had been transferred out in 1992. She then tried to trace the benefits through successive acquirers of Liberty Life, ultimately Sun Life Financial of Canada (UK) Ltd (SLFC), but no records of her policy could be found. HMRC's records also suggested that some pensionable service remained in the Midland Bank Pension Scheme. The Complainant complained, asserting that she had never requested or consented to a transfer.

The Decision

The trustee relied on three main items: the 1991 CETV, the 1992 ledger entry and HMRC membership data. SLFC, however, found no evidence that it had ever received or held the Complainant’s benefits.

TPO found the evidence of a transfer to be incomplete and inconsistent. Crucially, there was no written transfer request from the Complainant, no discharge or receipt from the receiving scheme, and no proof of payment. TPO also noted:

• Discrepancies between the CETV of £5,287 and the purported transfer of £6,181.11;
• Reliance on a CETV that had expired long before the alleged transfer date; and
• Non-compliance with the statutory time limits in Schedule 1A SSPA 1975, rendering any purported statutory transfer invalid.

On the balance of probabilities, TPO held that the Complainant’s pension had not been validly transferred. The trustee remained liable; SLFC did not. The trustee was directed to pay the Complainant £1,000 for distress and to pay past and future benefits as if no transfer had occurred, based on the 1991 CETV, adjusted for inflation and including a retirement uplift with interest.

The Key Takeaways

The decision underlines that trustees cannot rely on bare ledger entries or incomplete administrative data to prove a historic transfer; documentation and evidence of payment are essential. Where such evidence is lacking, trustees risk remaining on the hook for benefits they believed had been transferred out, especially where statutory transfer conditions were not met at the time.  This is also an important decision in the context of buy-out and the risks to trustees of members later challenging their benefits (including transfers out).

To read the full TPO decision, click here.

TPO holds that delay in completing transfer documentation amounted to maladministration

TPO has upheld a complaint by the Complainant confirming that an employer’s delay in completing transfer documentation caused the Complainant to lose the opportunity to transfer on favourable terms. Importantly, TPO found that the employer owed contractual and common law duties to take reasonable steps to enable the Complainant to exercise his transfer rights and held it liable for resulting financial loss, as well as distress and inconvenience.

The Background

The Complainant was employed on 9 November 2020 and wished to transfer his Local Government Pension Scheme (LGPS) benefits to the NHS Pension Scheme (NHSPS) on favourable Public Sector Transfer Club terms. Under the Public Sector Transfer Club Memorandum (2019) and corresponding NHSPS regulations, an election for a 'club' transfer must reach the receiving scheme within 12 months of the employee becoming eligible to join it.

The Complainant requested a cash equivalent transfer value (CETV) from the LGPS on 13 November 2020 and received a CETV on club terms on 16 March 2021. He promptly sent Form A to his employer on 24 March 2021 for completion. The employer did not complete its part until 17 June 2021, six days after the CETV guarantee expired. Multiple subsequent CETVs were issued, but delays (including further employer inaction and issues at scheme level) meant that by August 2022, the scheme administrator treated the Complainant as outside the 12‑month club window and only non‑club terms were available.

The Decision

The Ombudsman found that the employer’s delay in completing Form A was the effective cause of the Complainant losing club transfer terms, even though other parties also contributed to later delays, noting that the employer:

• Breached an implied contractual term to do what was reasonably required to enable the Complainant to exercise his right to request a club transfer within the necessary timescales, reflecting the duty of trust, confidence and mutual co‑operation; and
• Breached a common law duty of care not to cause foreseeable harm by failing to carry out administrative tasks with reasonable skill and care.

The employer was held liable for the Complainant’s financial loss arising from the loss of club terms, as well as his distress and inconvenience. The directions included:

• Paying £500 for distress and inconvenience.
• Actively supporting an application for a late club transfer.
• If a club transfer is ultimately refused, meeting 80% of the actuarially assessed financial loss (plus any tax-related sums).

The Key Takeaways

TPO's decision is a useful reminder that employers owe a legal (not merely administrative) duty to take reasonable steps to facilitate pension transfers within scheme and other deadlines. Delay in completing transfer documentation can result in liability for substantial financial loss if employees miss advantageous club terms. Equally, failing to engage with TPO's investigations may prejudice an employer’s position.

To consider TPO's full decision, click here.

TPR publishes guidance for trustees dealing with Virgin Media issues - a practical approach

 TPR has published guidance for trustees to address historic pension scheme alterations impacted by the decision in Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors [2024] EWCA Civ 843.

Schemes can now resolve any uncertainty by obtaining retrospective actuarial confirmation in respect of past alterations impacted by the judgment (alterations lacking actuarial confirmation or evidence of the same), as permitted by s.101 of the Pension Schemes Bill.

Recap on Virgin Media

Virgin Media Ltd was a landmark case that cast doubt upon the validity of historic alterations to pension scheme rules (some as far back as 1997). The Court held that a lack of written actuarial confirmation (as required by section 37 of the Pension Schemes Act 1993 for amendments impacting member benefits in contracted-out schemes) would render an amendment void, regardless of whether such actuarial confirmation would have been granted had it been sought at the time. Broadly, actuarial confirmation requires the scheme actuary to confirm that an alteration does not prevent the pension scheme from continuing to meet the "reference scheme test".

In February the Financial Reporting Council (FRC) published guidance for scheme actuaries responsible for giving retrospective confirmation in accordance with the Bill. The FRC made it clear that actuaries could take a proportionate approach and rely on "indirect evidence" that actuarial confirmation would have been given at the time, in recognition of the fact the Bill does not require the actuary to be certain (it needs to be "reasonable to conclude" that the alteration would not have prevented the scheme from continuing to satisfy the statutory standard). 

TPR's guidance

TPR confirms that the guidance is for trustees, scheme managers and responsible authorities (collectively referred to as governing bodies in the guidance) of occupational pension schemes that:

• Were contracted-out on the salary-related basis at any point between 6 April 1997 and 5 April 2016; and
• Have not been fully wound up or transferred to the Pension Protection Fund (PPF) or the Financial Assistance Scheme (FAS) at the date the Bill receives Royal Assent.

The second bullet point reflects the fact that the Bill confirms that alterations in wound up schemes will be treated as having met the requirements of the regulations from their original effective date and so are to be treated as valid. TPR makes it clear that schemes that have not been fully wound up will need to obtain actuarial confirmation (which indicates TPR does not condone leaving the issues unresolved where the scheme is in the process of winding up in order to benefit from the carve-out in the Bill).

TPR confirms that governing bodies should:

• Establish whether the scheme is affected by the judgments in the Virgin Media case and, if so, decide whether it will use the potential remediation available under the Bill;
• Understand the Virgin Media judgment and the remediation available under the Bill;
• Seek advice and information from the scheme's legal adviser and actuary;
• If using the remediation under the Bill, provide formal written instructions to the scheme actuary to undertake the work. TPR confirms the scope of work should specify:
• the alterations requiring consideration; and
• "where multiple alterations occurred at the same time, eg in a single deed of amendment, whether your actuary can consider the overall effect of all these alterations together, or consider each alteration individually, or a combination of both approaches. A new trust deed and rules may have contained substantive amendments even if it is called a consolidating deed and these will need to be identified".
• Agree a practical and realistic timescale with the actuary, and discuss timings with the sponsoring employer;
• Ensure that document retention policies will not cause the destruction of relevant records until matters are resolved;
• At the outset, consult the actuary to determine whether they have sufficient information. Consistent with the FRC's guidance advocating a proportionate approach, TPR confirms "we do not expect you to carry out exhaustive searches before your actuary undertakes the remediation work". If further information is required, TPR encourages governing bodies to liaise with former administrators, actuaries, legal advisers, employers, and trustees. 

As a starting point it encourages governing bodies to "consider the circumstances impartially" and determine whether alterations required a s.37 confirmation (noting alterations before 6 April 1997 or after 5 April 2016 will be out of scope) and, thereafter, whether any of those alterations are missing a s.37 confirmation. If so, TPR propose that trustees weigh up the cost/benefit of devoting resource to searching for evidence instead of assuming there was no certification and moving directly to remediation.

TPR notes there will be situations where the actuary cannot provide the retrospective confirmation for all the affected alterations; in such circumstances governing bodies should consider the reasons and decide what to do next. TPR does not address what these circumstances may be, but if an actuary is unable to provide actuarial confirmation it is likely trustees will need input from the scheme's legal adviser as to how it should proceed, including consideration as to whether actuarial confirmation can be provided if further information is provided. TPR also notes that schemes will need to consider the extent to which validity issues impact the funding position of the scheme; this will be more relevant if it becomes apparent the scheme cannot obtain retrospective actuarial confirmation via the Bill.

TPR also provides practical tips by encouraging governing bodies to take the following measures when carrying out this exercise:

• Make decisions in line with decision-making procedures in the scheme's governing documentation;
• Maintain a clear audit trail for decisions, actions, and results;
• Store actuarial confirmations alongside the alterations, with whoever holds the scheme's formal documentation, and provide copies to the sponsoring employer who should be kept informed of decisions;
• Prepare "a reactive response on this issue to manage member queries in a clear and consistent way", and update it following completion of the remedial exercise; and
• Assess quality of scheme data in light of the exercise, and improve it as necessary.

Trustees will be pleased to note that TPR confirms that it does not expect governing bodies to report remedial actions or failures to obtain s.37 confirmations in the past.  TPR notes that "any historic breach is very unlikely to be materially significant to us now in carrying out any of our functions".

Commentary

TPR has issued practical guidance that is similar to that issued by the FRC to actuaries, in that it makes it clear that trustees should take a proportionate and cost-effective approach to resolving s.37 issues. This is reflected in its recognition that trustees may decide to assume there is no actuarial confirmation and move directly to remediation instead of carrying out exhaustive searches for evidence. TPR notes that trustees can instruct actuaries before the Bill receives Royal Assent (which is expected to happen in April).

That said, TPR clearly expects schemes to address these issues rather than simply ignoring them and assuming compliance. Schemes in the process of winding up are expected to bottom out any Virgin Media issues, albeit in practice this may not make a practical difference if buy-out providers are unwilling to assume the risk of leaving s.37 issues unresolved (particularly as there should now be a route to validating alterations that would have been given actuarial confirmation had such been sought at the relevant time).

It is also interesting to note that TPR calls on trustees to assess Virgin Media issues "impartially", and in this respect it is noteworthy that TPR suggests that it does not expect to be informed of s.37 issues and that it is "very unlikely" to take any action in respect of the same.

If you have any queries or questions on this topic please do get in contact with a member of the team, or your usual RPC contact.